ADIA is the peak business organisation representing manufacturers and suppliers of dental products. Our vision is for an industry that empowers oral health professionals to advance the health and wellbeing of all Australians......................— ADIA Strategic Plan

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Company Tax Cut Will Create Med-Tech Manufacturing Jobs

30th Mar 17

Summary —

In order to assist Australian dental product manufacturers compete globally, ADIA has advised the senate that the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016 should be passed without delay.

Key Issues For The Dental Industry —

The Australian Dental Industry Association (ADIA), has called on the Senate to pass the Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016, legislation that would reduce the company tax rate from 30% to 25% over ten years to FY2026-27.

In raising the matter with Senators, ADIA has noted that dental product manufacturers in Australia range from small family businesses to ASX listed companies and to be sustainable these businesses need to export and have access to overseas capital investment. ADIA's advice has been that the proposed company tax cut will give these businesses a big leg-up when competing globally.

ADIA has drawn attention to the challenges that local dental product manufacturers face when getting new patient diagnostic and treatment solutions to market, noting that compared to many of their overseas competitors, Australian dental product manufacturers face higher wages, higher commercial lease costs, higher freight charges and higher corporate taxes. Dealing with the latter of these issues creates an environment that helps these businesses become more globally competitive.

Policy in this matter is set by employees of ADIA member businesses who support the work of the ADIA-BAC Business Affairs Committee which has published a policy statement on business taxation, available from the link below:

The importance of a lower company tax rate to those businesses seeking new the overseas capital necessary to invest in new product development has also been noted by ADIA in advice to Senators. This is because Australia is not alone when competing for overseas capital to fund research and development in the medical technology sector. A lower corporate tax rate provides a competitive platform for Australian businesses to reach out and successfully attract overseas investment.

ADIA is encouraging Senators to look at the proposed cut to corporate tax rate in the context of the need for Australia to create high-tech manufacturing jobs. ADIA's Chief Executive Officer, Troy Williams, has told senators that the key to job creation in the medical technology sector is more than fostering an environment in which we embrace new ideas in innovation and science – it's where we create a pro-business environment, supported by lower taxes, that will deliver the next age of economic prosperity in Australia.

As it is currently before the Senate, the Bill amends the Income Tax Rates Act (Cth) 1986 to reduce the corporate tax rate to 27.5 per cent for the FY2016-17 income year for corporate tax entities that are small business entities — that is, corporate tax entities that carry on a business and have an aggregated turnover of less than $10 million. This lower corporate tax rate will progressively be extended to all corporate tax entities by the FY2023-24 year. The corporate tax rate will then be cut to: 27% for the FY2024-25 year; 26% per cent for the FY2025-26 year; and 25% for the FY2026-27 and later income years.

Recognising the challenge of getting this bill passed as-is, ADIA has advised Senators that it is not opposed to an amendment cut the corporate tax rate to 27.5% for the 2016-17 income year for only businesses that have an aggregated turnover of less than $10 million; however, we would like to see the full package of tax corporate cuts passed within the life of this parliament.

Member Engagement —

Businesses that manufacture and supply dental products drive ADIA's policy advocacy priorities and, with respect to corporate taxation, do this through the ADIA-BAC Business Affairs Committee with updates provided at the quarterly ADIA State Branch Briefings. If your business has an interest in this matter, get involved today.

This update was issued on 30 March 2017 and please note that changes in circumstances after the publication of material or information may impact upon its accuracy and also change regulatory compliance obligations. The statements, regulatory and technical information contained herein are believed to be accurate and are provided for information purposes only. Readers are responsible for assessing its relevance and verifying the accuracy of the content. To the fullest extent permitted by law, ADIA will not be liable for any loss, damage, cost or expense incurred in relation to or arising as a result of relying on the information presented here. .

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